Globalization in Asia - Assignment Example

Q1) When Ricardo’s theory is applied to countries in Asia that have embraced globalization, we find that the overall scorecard is balanced as far asbenefits from such processes are concerned. There are some countries that have benefited from open trade whereas there are others for whom the loss of resources has not been compensated by other means. The benefits of globalization are extremely visible in countries like China and the other Asian tiger economies like South Korea where trade has indeed helped them to achieve far better economic growth than in other countries. These countries can be said to have reaped the maximum benefit from applying Ricardo’s theory of comparative advantage wherein they engage in trade that would make them better off in the longer run. For instance, China has benefited immensely from engaging in trade with other countries wherein it has imported raw materials that are scarce in the country and has exported the finished goods resulting from conversion of such raw materials leading to overall benefits for the country (Micklethwait & Wooldridge, 2003, 45). The most telling example of such processes is the way in which it has benefited from importing iron ore from other countries in the region and after smelting and converting it into cast iron and products made from them, the country has been able to reap the whirlwind of globalization. This is a clear example of the positive aspects of globalization and the application of Ricardo’s theory. In this way, China has succeeded in utilizing the benefits of globalization to a far greater extent than other countries in the region (Friedman, 2005, 80). The costs of globalization have been borne disproportionately by countries like India that have exported their precious raw materials and have imported finished goods thereby getting struck by a “double whammy” wherein they are left with loss of resources as well as paying high prices for the finished goods. The most glaring example of this has been the consistent export of iron ore and other materials by states in India to countries like China where they are converted to finished goods. This has resulted in gross exploitation of the natural resources and has left the country with no option but to pay more for the finished goods. Hence, this is an instance of a country that has paid heavily and has been impacted negatively by the processes of globalization (Shmick, 2008, 193). Of course, many in the country do not see it this way as they point to the advantages of exporting resources that cannot be converted easily in the home country. Though opinion is divided in this matter, it goes without saying that the costs of globalization have indeed been high for countries like India and Bangladesh. In the case of Bangladesh, the country has emerged as a destination for low wage work that has resulted in extreme disparities between what the workers in the country make and what they earn. Hence, the costs of globalization have indeed been high in these countries. On balance, it can be said that countries have had some successes because of globalization and hence it is not all black and white (Bhagwati, 2004, 76). The point about globalization being a win-win situation for the countries has been called into question if we take the examples of the countries that have lost out as a result of globalization. However, there have been instances of countries that have reaped the benefits of globalization and hence the overriding conclusion is that it depends on the state of infrastructure and the governmental incentives for growth and development if globalization has to truly succeed in creating a situation that is favourable for the countries. Hence, by no means it can be said that globalization creates winners or losers in a black and white manner and the results for the countries in Asia have been mixed leading to many experts calling for the effective implementation of the policies that the state should embrace. Hence, the point remains that Ricardo’s theory works well when it is applied to the countries where there is an efficient mechanism for trade and commerce and where the state support is towards making the industries competitive and efficient. In countries that have neither like India and Bangladesh, globalization and Ricardo’s theory produces more losers than winners and this is the culmination of the processes of globalization. In conclusion, globalization can be a force for good and bad and hence the process must be managed and suitable rewards obtained from the process through effective state intervention and support to industry (Rodrik, 2010, 49). Q2) Globalization has been said to be a win-win situation for poor countries because they can integrate themselves into the global economy and reap the benefits of free trade and commerce. However, the results have been mixed for many countries if we go by the indicators such as the HDI or the Human Development Index. There is much evidence from countries that are poor wherein the HDI indicates that globalization benefits a tiny few at the expense of the many. It has been said that globalization is a process wherein the poor end up subsidizing the lifestyles of the rich. This has been especially true in countries in Asia and Africa that have seen gains from globalization accrue to a minority and the vast majority of the people are left without any viable means of livelihood or sustenance. The point here is that GDP, Export and Import figures are just indicative and the real measures like the HDI indicate that globalization has created more losers than winners in the poor countries. However, we cannot generalize for all the countries as there are notable exceptions like China and the Asian tiger economies that have seen the rates of poverty decrease dramatically because of globalization. The point here is that for many poor countries, globalization has been a curse whereas for other countries it has been a blessing. Hence, one cannot generalize in this aspect though the overwhelming majority of poor countries continue to languish where they were prior to the advent of globalization (Stiglitz, 2008, 111). Developing countries if they are to take advantage of free trade and globalization need to ramp up their infrastructure and speed up the pace of reform and liberalization. Further, this reform process has to be with a humane face since the shock therapies that such reform accompanies would entail a huge social cost on the people. The fact that large scale industrialization and liberalization displace people and uproot them from their native places means that the state must an effective plan to tackle these discontents of globalization and hence must proceed cautiously and with great care. The results on the ground indicate that the state in many poor countries has not been able to implement the neo liberal policies with rapid strides in the improvement of lives of the poor (Chua, 2007, 56). This is the case with countries in Africa and Asia where globalization has widened the already yawning gap between the rich and the poor and has resulted in a wide chasm between the haves and the have not’s. In this respect it can be said that by taking the HDI as a measure, globalization has failed to live up to its promise of reducing the proportion of poor. However, the counter claims are that globalization has succeeded in many countries where the incidence of poverty has come down significantly after their economies were opened up. The point is that in states which have a coherent and cohesive policy of development, the results have been good whereas in the failed states and in states where there is weak governance, globalization has exacerbated the plight of the poor (Klein, 2006, 169). Globalization can succeed only where there are incentives for growth and development and where the government has a clear plan to tackle poverty and underdevelopment. Otherwise, globalization would result in widening already existing disparities between the rich and poor and hence cannot be a win-win situation. On the contrary globalization becomes a zero sum game where one side has to lose at the expense of the other. This is the sad reality in many countries that have had to face the brunt of neo liberal policies that target only the rich and leave the poor out of the equation. There are many experts who question the Washington Consensus of development and point to the many failures in the countries that are underperforming as far as the HDI is concerned. Since HDI as a measure indicates that the proportion of poor has not dwindled and on the other hand, has actually increased, globalization has indeed failed. Further, the composite index measures social health, access to education, health and basic amenities as well and in the provision of these measures, the state has to proceed in a well planned manner (Sen, 2011, 138).The fact that it has not been able to do so is a clear indication that globalization has failed to live up to its promise in these countries. In conclusion, globalization ought to level the field for the poor in these countries and it is by no means certain that it is doing so. References Bhagwati, Jagdish. 2004, In Defense of Globalization, Oxford, London.pp 3-5. Friedman, Thomas. 2005, The World is flat: A brief history of the Globalised World in the 21st Century, Allen Lane, London. Micklethwait, John & Wooldridge, Adrian. 2003. A Future Prefect: The challenge and promise of Globalization. Random House. London, 2005. Chua, Amy. 2007, The World on Fire, Penguin, New York. Klein, Naomi. 2006, The Shock Doctrine: Rise of Disaster Capitalism, Penguin, New York. Naim, Moises. 2008, Illicit: How Smugglers, Traffickers, And Copycats are Hijacking the Global Economy, Double Day, London. Rodrik, Dani. 2010, Has Globalization Gone Too Far? McGraw Hill, New York. Sen, Amartya. 2011. Pathologies of Power. OUP, New York. Shmick, David. 2008, The World is Curved: Hidden Dangers to the Global Economy, Simon and Shuster, New York. Stiglitz, Joseph. 2008, Globalization and its Discontents. Double Day, New York. Read More